Centre turns for a massive crackdown on black money in gold; Clarifies the rumours

New Delhi, Dec 1: Indians are known for their obsession towards gold and it has been the  staple investment in both rural and urban  India.

Investments in the stock markets are reportedly done by a miniscule section of the Indian population—4 to 5 percent whereas gold is the favored investment irrespective of the class divide. It is a great leveler in that sense.

Hence,  there is no doubt that we  Indians would head to the jewellery shops as the gold prices have dipped to a six month low.

However, the same gold beckons as much the crooked heads as it does to the honest. Reports suggest that the bulk black money has  been invested in the yellow  metal apart in the real estate sector.

After attacking the black money hoarders in the form of currency in the form  of demonetisation, the centre is  expected to turn their guns towards gold. However,  the such step has already started creating a panic after rumours have been circulated.

Now, this has prompted the finance ministry to come up with a proper clarification.

The finance ministry has said that there will be no seizure of gold jewellery to the extent of 500 gms per married lady and 250 gms per unmarried lady and 100 gms per male.

Also, jewellery/gold legally inherited and acquired out of explained sources, is also not chargeable to tax, the finance ministry says. Jewellery/gold purchased out of disclosed income or exempted income or reasonable household savings not chargeable to tax.

The government clarifies that the apprehension sought to be created that the jewellery with the household which is acquired-out of disclosed sources or exempted income shall become taxable under the proposed Taxation Laws (Second Amendment) Bill, 2016, is totally unfounded and baseless.

In the wake of Taxation Laws (Second Amendment) Bill, 2016 which has been passed by the Lok Sabha and is under consideration with Rajya Sabha, some rumours have been making rounds that all gold jewellery including ancestral jewellery shall be taxed @75% plus cess with a further penalty liability of 10% of tax payable.

“Further, legitimate holding of jewellery up to any extent is fully protected,” it added.

The Bill, which is currently under consideration of the Rajya Sabha, will amend Section 115BBE of the Income Tax Act to provide for a steep 60 per cent tax and a 25 per cent surcharge on it (total 75 per cent) for black money holders.

Another section inserted provides for an additional 10 per cent penalty on being established that the undeclared wealth is unaccounted or black money, taking the total incidence of levies to 85 per cent.

CBDT said: “Tax rate under section 115BBE is proposed to be increased only for unexplained income as there were reports that the tax evaders are trying to include their undisclosed income in the return of income as business income or income from other sources.

“The provisions of section 115BBE apply mainly in those cases where assets or cash etc. are sought to be declared as ‘unexplained cash or asset’ or where it is hidden as unsubstantiated business income, and the Assessing Officer detects it as such.”